Professor Mark J. Perry's Blog for Economics and Finance
The USD has been gaining strength vs. the euro, and is now selling at a .54% one-year forward premium (spot rate of $1.4718/EUR and one-year forward rate of $1.4639/EUR), the highest one-year forward premium for the dollar (vs. euro) in at least several years.
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
2 Comments:
Isn't the 1-year forward premium a simple function of the relative one year interest rates in the dollar and euro markets? Forward premiums don't say anything about the relative value of the dollar to the euro that is not reflected in the spot rates, right?
Total noob here but at a 0.54% increase per year how long until the dollar trades at the same rate it did in say 2000?
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